West Coast Community Bancorp, the holding company for Santa Cruz County Bank, headquartered in Santa Cruz, California, and 1st Capital Bancorp, the holding company for 1st Capital Bank, headquartered in Salinas, California, have entered into an agreement and plan of reorganization and merger, pursuant to which 1st Capital Bancorp will merge with and into West Coast Community Bancorp in an all-stock transaction valued at approximately $63 million, or $10.78 per FISB share, based on the closing price of $29.94 for West Coast Community Bancorp shares on May 20, 2024.
The transaction is subject to customary closing conditions, including regulatory approvals and shareholder approval from both parties. Both boards of directors of West Coast Community Bancorp and 1st Capital Bancorp have unanimously approved the transaction, which is expected to close in the fourth quarter of 2024. The directors of West Coast Community Bancorp and 1st Capital Bancorp have entered into agreements pursuant to which they have committed to vote their shares in favor of the transaction. At closing, Krista Snelling, president and CEO of the Bancorp and Bank, will lead the combined franchise.
Highlights of the Announced Transaction
- At nearly $3 billion in pro forma assets and 10% deposit market share in Santa Cruz and Monterey Counties (on a combined basis, based on FDIC data as of June 30, 2023), the bank is well-positioned for continued success as the leading community business bank in a vibrant market area.
- The transaction enhances the bank’s profitability, diversifies the bank’s client base, deepens and extends the bank’s market reach, and better positions the bank to profitably deploy the technology and services that will enhance the client experience and provide both product diversification and additional growth opportunities.
- SCZC expects to realize approximately 20% annual EPS accretion following full realization of operating efficiencies.
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Under the terms of the agreement, shareholders of FISB are expected to receive a fixed exchange ratio of 0.36 shares of SCZC common stock in exchange for each share of FISB common stock. The value of the merger consideration will fluctuate based on SCZC’s stock price. On a pro forma basis, the holders of FISB common shares will own approximately 20% of the issued and outstanding SCZC common stock. At closing, current chairman and vice chairman of 1st Capital Bancorp, Kurt J. Gollnick and Daniel R. Hightower, respectively, will join the boards of directors of West Coast Community Bancorp and Santa Cruz County Bank. Kurt J. Gollnick will join as vice chairman.
“We are thrilled to announce this exciting merger with 1st Capital Bank, a strategic move that underscores our commitment to sustained growth and exceptional service,” Snelling said. “Our institutions have a rich history of serving our communities with dedication and passion, and this merger will only strengthen that commitment. 1st Capital Bank has built an impressive deposit market share, especially within Monterey County, and a solid reputation for expertise in business lending.”
“This announcement is a significant milestone for our combined franchise. The complementary strengths of both institutions create the capacity to unlock exciting opportunities for our shareholders, much like the bank’s successful merger with Lighthouse Bank in 2019,” Stephen Pahl, chairman of the boards of West Coast Community Bancorp and Santa Cruz County Bank, said. “The expanded scale and geographic reach resulting from this merger has the potential to deliver sustained value creation. With a solid balance sheet and a focus on operational efficiency, we are positioned to drive profitability and deliver enhanced returns for our shareholders.”
“In essence, this merger represents a strategic alignment of values, capabilities and aspirations — a catalyst for growth, profitability and enduring success. Together, with Santa Cruz County Bank, we are excited to embark on this journey, confident in our ability to create lasting value for all stakeholders,” Gollnick said. “We have long admired Santa Cruz County Bank’s commitment to building shareholder value, achievement of top-level financial performance and sharing the value of positive impact on the regions it serves.”
“This merger allows us to leverage our combined resources more effectively, empowering us to innovate and adapt to the evolving needs of our clients and communities,” Sam Jimenez, president and CEO of 1st Capital Bancorp and 1st Capital Bank, said. “Another compelling reason behind this merger is the enhanced lending capacity it brings as our combined assets upon closing will be nearly $3 billion. By joining forces, our enhanced lending power and geographic footprint will drive opportunities for business expansion, agriculture, entrepreneurship and economic growth.”
Advisors to the Transaction
Keefe, Bruyette & Woods, A Stifel Company, acted as financial advisor and Gary Steven Findley & Associates as legal counsel to West Coast Community Bancorp in the transaction. Piper Sandler acted as financial advisor and Stuart | Moore | Staub as legal counsel to 1st Capital Bancorp.
